Commentary Magazine


Contentions

Re: Pinching Pennies in a Spending Spree

Like Jennifer, I too found the Wall Street Journal’s story on latter-day federal penny-pinching fascinating. I have two comments:

1) Here is the perfect example of why the government should never run anything it doesn’t absolutely have to. Because corporations are wealth-creation machines and Benjamin Franklin was right (“A penny saved is a penny earned”), corporate management spends much of its time looking for ways to save money.

The most famous example of this cost-scavenging attitude, perhaps, is the story of John D. Rockefeller and the drops of solder. He was at a Standard Oil factory where kerosene was being put in five-gallon cans sealed with solder. He asked the manager how many drops of solder were being used. The answer was 40. “Try 38,” Rockefeller said. A few of the cans leaked, so they tried 39. No leaks. The yearly savings — which went, of course, directly into the pockets of Standard Oil shareholders — were over $100,000. No wonder Rockefeller created the greatest fortune of his age.

But bureaucrats have no incentive to save money. Indeed, since bureaucratic prestige is measured in the size of one’s budget, they have every incentive not to save money. That probably accounts for why the Forest Service was buying white vehicles and painting them green, instead of — wait for it! — buying green vehicles to start with.

2) How do we get bureaucrats to think like corporate managers and look constantly for ways to save money? Simple, incentivize them to do so and they will be all over waste and inefficiency like ducks on a june bug. The Royal Navy showed how it’s done in the 18th century. The navy, naturally, wanted to capture as many enemy vessels in wartime as possible and disrupt enemy commerce to the maximum possible extent, so they simply gave the ships’ officers and crews the profits. All captured vessels became the property of the men who captured them. Merchant vessels and their cargoes were sold to the highest bidders, and warships were bought by the Royal Navy (which is why so many Royal Navy ships in the days of Nelson had French names). A single happy capture could make a captain very rich, and members of the crew would have more ready money in their pockets than they had ever known.

If the federal government were to give half the first year’s savings generated by each cost-saving idea to the bureaucrats who came up with it, they’d save a lot more than $100 million. That would hardly get the government out of deficit, to be sure, as most of the federal budget goes to entitlements and interest on the debt, which would remain unaffected. But it would create a different culture, and at least we’d see the end of $600 toilet seats.



Join the discussion…

Are you a subscriber? Log in to comment »

Not a subscriber? Join the discussion today, subscribe to Commentary »





Welcome to Commentary Magazine.
We hope you enjoy your visit.
As a visitor to our site, you are allowed 8 free articles this month.
This is your first of 8 free articles.

If you are already a digital subscriber, log in here »

Print subscriber? For free access to the website and iPad, register here »

To subscribe, click here to see our subscription offers »

Please note this is an advertisement skip this ad
Clearly, you have a passion for ideas.
Subscribe today for unlimited digital access to the publication that shapes the minds of the people who shape our world.
Get for just
YOU HAVE READ OF 8 FREE ARTICLES THIS MONTH.
FOR JUST
YOU HAVE READ OF 8 FREE ARTICLES THIS MONTH.
FOR JUST
Welcome to Commentary Magazine.
We hope you enjoy your visit.
As a visitor, you are allowed 8 free articles.
This is your first article.
You have read of 8 free articles this month.
YOU HAVE READ 8 OF 8
FREE ARTICLES THIS MONTH.
for full access to
CommentaryMagazine.com
INCLUDES FULL ACCESS TO:
Digital subscriber?
Print subscriber? Get free access »
Call to subscribe: 1-800-829-6270
You can also subscribe
on your computer at
CommentaryMagazine.com.
LOG IN WITH YOUR
COMMENTARY MAGAZINE ID
Don't have a CommentaryMagazine.com log in?
CREATE A COMMENTARY
LOG IN ID
Enter you email address and password below. A confirmation email will be sent to the email address that you provide.